WAYNE, W.Va. — There is pain across the nation’s coal fields, but here in West Virginia, the disruption is particularly acute.
Mines are closing almost every month. Sawmills that provide wooden support beams for the tunnels are laying off workers, and diners are putting up signs asking their customers to pray for the miners.
The coal industry, long the heart that pumped the economy here, is in deep trouble, buffeted by power plants switching to cheap natural gas, crippling debt, mounting foreign competition and increasingly strict regulations to limit greenhouse gases and toxic emissions like mercury.
“It’s just the times we are facing,” said Mitchell Maynard, a miner, as he left the Camp Creek mine recently after one of his last shifts before he and more than 400 of his co-workers lose their jobs.
Mr. Maynard, who wears a large tattoo on his upper left arm showing a joyous Jesus embracing a blissful miner, has been contemplating what he will do to support his family since he learned last month that the mine will close for good. He has yet to come up with an answer, but he has not lost hope. “I know I will find guidance from the Lord,” he said.
Mr. Maynard’s once-mighty employer, Alpha Natural Resources, and the entire coal industry could use some divine intervention right about now. The most immediate challenge to the coal industry is the hydraulic fracturing revolution that has produced a glut of natural gas over the last four years, making the fuel cheaper to burn and stimulating a relentless switch by utilities away from coal.
Since January, six domestic coal producers have filed for bankruptcy, including Patriot Coal, which applied for Chapter 11 for the second time.
The decline has taken a heavy toll here in Wayne County and the surrounding area in West Virginia and Kentucky, where roughly one in three of the nation’s 80,000 coal miners work.
They are at the center of a layoff epidemic that has reduced their numbers by roughly 5,000 annually over the last four years in the two states alone. And the wave of layoffs is spreading, with Murray Energy, one of the nation’s largest coal producers, recently announcing it would cut its work force in Ohio and Illinois, as well as West Virginia, by more than 1,800 miners.
“In the past we always knew that the demand for coal would rebound and the jobs would come back,” Cecil E. Roberts Jr., the United Mine Workers of America president, said in a speech in June. “This time, there is no such certainty. Fundamental changes are underway in America and across the world that will have a lasting impact on the coal industry and our jobs.”
Coal production in the United States has declined by 15 percent since 2008, and still, stockpiles of coal are mounting at mines as coal-fired power plants shut down month after month.
A commodity that once fired half of the country’s power now accounts for just under 40 percent. And the Energy Department projects that percentage will slide further, to 34 percent in 2040, as power plants turn to natural gas and renewables like wind and solar power.
The result is compounded economic misery in Wayne County, with its potholed roads, vacant stores, abandoned trailer homes and gutted gas stations with little more standing than antique Phillips 66 signs.
Local officials say the new mine closing will mean millions of dollars in lost taxes to local governments, schools and hospitals. Already, one village is in receivership. Railroad workers who used to carry coal from the local mines are commuting farther and farther for work, and fear they will eventually have to move or lose their jobs.
“There is widespread bitterness about the country taking our coal for all these years when it needed us,” said Don Perdue, executive director of the Wayne County Economic Development Authority, “and then simply saying goodbye.”
The industry as it is currently composed is no longer sustainable, according to Wall Street analysts. They note that exports, long viewed as coal’s savior, are dropping as China curtails pollution. The stronger dollar is making American coal more expensive on international markets relative to competitors like Australia, Indonesia and Colombia. And prices for metallurgical coal, a traditional moneymaker for coal companies, especially here in Appalachia, have plunged by more than half over the last three years.
The depressing panorama has sent shares of Peabody Energy, the American coal company that is the largest in the world, from $72 just four years ago to under $2 a share. On Thursday, the New York Stock Exchange suspended trading in Alpha’s stock and moved to remove it from the exchange.
“They are all just trying to survive and hold on,” said Nathan Littlewood, a Credit Suisse mining research analyst, “and hope they are the last man standing.”
No company is hanging on tighter and is facing stiffer odds than Alpha Natural Resources, a top producer of various grades of coal used to make steel and produce power. It has more than 50 active mines and 20 coal preparation plants across Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming. For the last three years it has been forced to relentlessly close mines, shaving its payroll by roughly 4,000 workers, or more than a quarter of its work force.
Like many coal companies, Alpha went on a buying spree between 2009 and 2011 when coal prices were high, global demand was galloping along with the surging Chinese economy and their earnings were peaking. Perhaps its most fateful decision was to buy Massey Energy, a major Appalachian producer that tilted toward producing coal for steel making, for $7 billion in 2011.
The acquisition was based on an assumption that China and other developing countries had an insatiable appetite for Appalachia’s high-heat-producing coal for steel making, and few analysts predicted the deceleration of Chinese steel demand.
After suffering through more than three years of losses, Alpha is burning through cash and is struggling to service its $3.3 billion debt burden.
For workers, that means more closed mines. Last week, Alpha warned nearly 300 workers in southeastern Kentucky and Virginia that it expected to close six mines and a processing plant.
“We’ve been navigating through a long down cycle,” Alpha’s chief executive, Kevin S. Crutchfield, said in a recent conference call. “In fact, it’s become quite apparent that market conditions have deteriorated further since the beginning of the year. Frankly, these factors are outside of our control.”
But many if not most other large coal companies are not in much better shape, energy analysts say, and the industry must endure a painful reorganization, much like those that the steel and auto industries went through in recent decades.
“It’s actually pretty simple,” said Brandon Blossman, managing director for research at Tudor, Pickering, Holt & Company, the energy investment and banking firm. “These guys go through bankruptcy, they clean up their balance sheets and they continue to produce coal.”
But miners being laid off here are left with few options.
After several decades working as a miner, Patrick Lawson has paid off the mortgage on his trailer home, and he is proud of his antique glassware collection and a modest nest egg he thought he could live on after working a few more years. But he has several badly damaged fingers, has lost much of his hearing and now is facing shoulder surgery from mine work, and said that his career options after his job ends at the Camp Creek mine in a few weeks were pretty limited.“I may be working somewhere for minimum wage before it’s over,” Mr. Lawson said with a shrug while enjoying a cool breeze on his front porch. “I don’t think the coal industry will ever be back to what it was.”